DuPont wins $900m Kevlar trade spy case

South Korea’s Kolon found to have stolen trade secrets of fibre in largest ever settlement in intellectual property trial The industrial conglomerate DuPont has won $920m (£583m) in damages after a US jury ruled that a South Korean firm had stolen trade secrets about the high-strength fibres used in its Kevlar body armour. Kolon Industries mounted a “concerted, orchestrated and persistent effort” to steal confidential information, DuPont’s lawyer Thomas Sager said. The Korean firm said it would appeal and was “confident that a fair and favourable decision will be reached on appeal”. The firm is also countersuing DuPont. The jury in Richmond, Virginia, took two days to find in favour of the US firm, which sued Kolon two years ago. DuPont argued that Kolon had conspired with a group of former employees to steal the secrets of its top-selling fibre. Michael Mitchell, a former employee whom the US authorities said gave Kolon proprietary information about Kevlar, is now in prison. The US firm alerted the Federal Bureau of Investigations (FBI) after learning Mitchell, a former DuPont engineer and Kevlar marketing executive, had confidential information on his home computer. The FBI searched his house and found DuPont documents and confidential information belonging to DuPont, federal prosecutors said last year. Mitchell was sentenced to 18 months in prison last March after pleading guilty to theft of trade secrets and obstruction of justice. Kolon recruited other former DuPont workers, from both the US firm and its Japanese subsidiary, as part of a “concerted effort” to obtain information about Kevlar, according to court filings. Kevlar, created by DuPont in 1965 and originally used in racing car tyres, now accounts for $1.4bn of DuPont’s sales and is used in bullet-proof vests, army helmets, snare drums, suspension bridge ropes and fibre-optic cable. “DuPont’s investment in developing this information, amounting to hundreds of millions of dollars over many years, was thereby essentially lost,” the company said in a court filing in October. “Kolon is now able to compete against DuPont in the aramid [the class of synthetic fibres that includes Kevlar] marketing using DuPont’s own information against it.” The “jury decision is an enormous victory for global intellectual property protection”, Sager said. “It also sends a message to potential thieves of intellectual property that DuPont will pursue all legal remedies to protect our significant investment in research and development.” Kolon’s rival product is called Heracron. The Korean firm accuses DuPont of creating unfair competition by requiring customers to buy 80% to 100% of their Kevlar or equivalent fibres from the company. The case is set to go to trial next March. A Kolon spokesman said the verdict was: “The result of a multi-year campaign by DuPont aimed at forcing Kolon out of the aramid fibre market. Kolon had no need for and did not solicit any trade secrets or proprietary information of DuPont, and had no reason to believe that the consultants it engaged were providing such information. Indeed, many of the ‘secrets’ alleged in this case are public knowledge.” Press Millen, an expert on trade secrets cases and attorney at Womble Carlyle, said it was the largest settlement in a trade secrets case he could recall. “In order to get a settlement this large there has to be a real sense of egregiousness and the jury has to buy into that,” he said. He noted similarities to the last big trade secrets lawsuit in which the Barbie toy firm Mattel was ordered to pay $310m to a rival, MGA, in a dispute over the origins of the Bratz doll range. He said the jury’s familiarity with Kevlar may have contributed to their willingness to reach such a large settlement. “Kevlar is also a well-known product, bought in civilian as well as military contexts. It’s a brand name and a lot less abstract than a formula,” he said. The appliance of science Best known for bullet-proof vests and army helmets, and found in a range of sports equipment – such as bicycles, snowboards, rackets and hiking boots – Kevlar has also been to Mars on the Pathfinder spacecraft and used by drug-traffickers for the hulls of submarines. Discovered in 1965 by Stephanie Kwolek, a DuPont scientist, Kevlar is a light and flexible aramid fibre five times stronger than steel. It is also found in military vehicle armour, oil and gas pipes, aeroplane wings and helicopter blades. Oren Gruenbaum DuPont Manufacturing sector Intellectual property United States South Korea Dominic Rushe guardian.co.uk

Posted by on September 15, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.